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Jobs Key to Consumer Confidence

Job
growth is at the heart of increasing consumer confidence and growing
the economy, Quincy Krosby, chief market strategist for Prudential
Financial, told AICPA Council members Tuesday in San Diego.

“If
we don’t bring the word ‘confidence’ in, small business owners will
be afraid to hire. They are worried about credit markets and the
economy and simply can’t bring in more jobs,” she said. “[When
consumers start] holding back really quickly and being concerned
about their job, [they] stop spending.”

Initial
unemployment claims are beginning to trend upward, Krosby said, but
she noted that what happens in just a couple of weeks cannot qualify
as a trend. The Federal Reserve is concerned with both job growth
and inflationary pressures, she added.

The
reason jobs are crucial dates back to the Great Depression, when the
country faced 25% unemployment rates and generations of people were
“terrified to spend money,” Krosby said.

“The
Great Depression weighs on policymakers, whether Republican or
Democrat,” she said. “That prevents us from letting the market clean
itself up.”

Globally,
what is taking place in Europe and China will ultimately affect U.S.
exports, but it is unclear by how much, she added.

The
biggest fear related to the events in Europe, particularly Greece,
is whether they will “contaminate the system,” she said. If they do,
she expects a stimulus from Washington, even if it is not labeled
that way.